Finance, transport sectors weigh on British productivity: ONS study

Reuters Staff

3 Min Read

LONDON, March 5 (Reuters) - British finance and transport firms have struggled with particularly weak productivity since 2007, an official study showed on Wednesday, but it gave no details on why the problem was so acute in these sectors.

Productivity has been a major concern in Britain since the financial crisis and last year’s economic recovery has not boosted workers’ efficiency as much as the Bank of England expected - potentially weighing on how much Britons can earn in the long term.

Service businesses account for more than three quarters of British output, and 79 percent of total hours worked.

“Estimates of productivity in the services industry ... suggest that recent weakness is accounted for by several specific sub-industries - including finance and insurance, accommodation and food, and transport and storage services,” the report from the Office for National Statistics said.

An ONS official said it was not clear why productivity was poor in those particular services.

But the report showed productivity has returned to pre-downturn trend rates in other types of services.

Many economists say low productivity is partly explained by lower-than-expected job losses during the recession that followed the financial crisis.

A business survey on Wednesday showed British companies hired staff at the fastest pace in at least 16 years last month.

Finance minister George Osborne said last month productivity growth was disappointing, and put most of the blame on the slowness of a recovery in bank lending after the 2008 financial crisis.

Data on Monday showed lending to businesses declined again in January, and many small and medium-sized firms still complain of a lack of access to funding to pay for the investment that can make workers more productive.

An analysis from the ONS in January showed that while Britain enjoyed the strongest productivity growth among Group of Seven economies between 1991 and 2007, its performance was the weakest between 2007 and 2012.

Bank of England policymaker Ben Broadbent said last week that although there are grounds for optimism about an improvement in productivity, it may not approach U.S. levels even if international headwinds recede. (Reporting by Andy Bruce; Editing by Ruth Pitchford)